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FIRST LOOK: CLIFF WORRIES HIT CONSUMERS — Per CNBC’s Steve Liesman in results that will break on CNBC’s “Squawk Box” this morning: “Despite more economic optimism compared with a year ago, the CNBC All-America Economic Survey finds holiday spending will be virtually flat as uncertainty and fiscal cliff concerns weigh on consumers. Americans plan to spend $742 on average buying gifts, compared with actual spending of $740 in 2011. … The number remains muted even though Americans are as optimistic about expected pay hikes as they’ve been since just after the recession began. …

“On the fiscal cliff, 70 percent of Americans said they have heard about the issue … but 48 percent of Americans say there will be an agreement to avoid the automatic spending cuts and tax increases with 43 percent saying it is unlikely. … Among the 800 Americans polled nationwide, raising taxes and capping deductions for those who earn more than $250,000 were the most acceptable ways to trim the deficit. Cutting Medicare spending and raising the retirement age were the most unacceptable.”

BUSINESS WANTS PERMANENT DEBT LIMIT HIKE — Per a plugged-in exec: “Have been picking up a lot of support amongst business execs for the idea of extending last year's McConnell patch on debt limit. It gives members of Congress an opportunity to vote against debt limit increases without harming full faith and credit of the U.S. After last summer's debacle around debt limit debate and subsequent downgrade, a lot of CEOs would prefer a symbolic vote to the brinksmanship that both parties have played with debt limit votes.”

BUT DO REPUBLICANS CARE WHAT CEOS THINK? — From a top GOP operative: “Think you are overestimating the impact of CEOs on Republican leaders/members. The GOP, and the public, largely view CEOs as people who stick their finger in the wind and then choose a side out of their own selfish corporate interest. They aren't free market and they don't sway voters. The Obama play for CEOs is all about the media — the media is far more in love with CEOs than anyone else is.”

FACTS OF LIFE: FORGET ABOUT THE DEBT LIMIT — It’s certainly understandable that the administration wants to take the debt limit away as a GOP bargaining tool to get big spending cuts next year and beyond. And the debt limit itself is a relic that arguably has no constitutional validity and could be obviated by existing statute (see section 4 of 14th Amendment and the trillion-dollar coin idea). But it’s also impossible to imagine Republicans agreeing to a deal that includes both a marginal rate hike (which the White House says in non-negotiable) and a permanent transfer of debt limit authority to the White House. That’s way too big an ask.

If the renewed push for such authority is simply a negotiating chip that the administration fully expects to hand over to help Republicans agree to higher rates, it makes some sense. … But if the administration seriously believes it is going to get the GOP to give up debt ceiling authority (never mind for now that it was a Republican idea), it is engaging in a fantasy that could jeopardize a fiscal cliff deal. The best the White House can hope for is a single debt limit hike as part of a fiscal cliff deal, and even that is far from certain.

FIRST LOOK: WHEN RATES START RISING, WILL IT BE TOO LATE? — Third Way is coming out with a report today that argues “many investors are paralyzed and uncertain about where to put their money. With once-safe economies now in the gutter, U.S. Treasuries have become, in essence, the cleanest porta-potty at the state fair. … [I]nterest rates on U.S. government debt are likely to rise in the future absent a balanced budget deal that changes our fiscal trajectory, and … by the time markets signal that the U.S. has too much debt, it will likely be far too grave to readily correct. http://bit.ly/UfWyKR

FIRST LOOK II: CORPORATE RATE PUSH — The Rate Coalition is sending a letter to the Hill this morning signed by 17 CEOs of the largest companies and trade groups in the U.S., including FedEx, Altria, Boeing, Ford, Verizon and Disney. See the letter: http://bit.ly/TL3JMK

FIRST LOOK III: BONUS DEPRECIATION PUSH — A group of mroe than 80 Fortune 500 companies sent a letter to the Hill asking to extend the current 50 percent bonus deprecation rule: “This extension will provide an immediate incentive for businesses to make new capital investments in the United States, boosting the U.S. economy and job creation in 2013.” http://bit.ly/VxVFEp

THIS MORNING ON POLITICO PRO FINANCE — Kate Davidson looks at why there is so much focus on who will replace Raj Date at CFPB … Zachary Warmbrodt on SEC staffers following Mary Schapiro out the door … To learn more about Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD THURSDAY MORNING — RIP Dave Brubeck. Even if you think you don’t know his music, you will almost certainly recognize the classic hit “Take Five,” written by Paul Desmond and performed by the Dave Brubeck Quartet on the 1955 album “Time Out” and used in countless movies and TV shows: http://bit.ly/Xt2LKQ. Send your tips and comments: bwhite@politico.com; and follow on Twitter: @morningmoneyben and @POLITICOPro.

DRIVING THE DAY — President Obama heads to northern Virginia this afternoon to keep up the cliff PR push and visit a middle class family “to discuss the importance of extending income taxes for 98 percent of Americans and 97 percent of small businesses” … In the evening the first family will attend the National Christmas Tree Lighting on the Ellipse … Senate Banking has a hearing at 10 a.m. examining oversight of FHA and featuring testimony from HUD Secretary Shaun Donovan … Initial jobless claims at 8:30 a.m. expected to continue post-Sandy drop to 380K from 393K.

DTCC SEEKS RULE EXTENSION – DTCC sent a letter to the CFTC asking for an extension of the time period for comment on Proposed Rule 1001 and requesting a public roundtable to discuss the proposal: http://bit.ly/SOFPRo

MEET THE TOP SMALL BUSINESS JOB CREATORS — Inc. magazine is out with a ranking of the top 100 small businesses for job creation over the last three years, led by Universal Services of America in Santa Ana, Calif., with 17,330 new jobs. Inc. is hosting an awards dinner for small businesses featuring SBA head Karen Mills at the Mead Center this evening at 6 p.m. http://bit.ly/R9zEKT

FRANK RIPS HENSARLING — Bloomberg’s Jonathan Salant: “Rep. Barney Frank, who spent two years leading the House Financial Services Committee, says incoming Chairman Jeb Hensarling of Texas will bring ‘complete and total irrelevance’ to the committee. ‘Legislatively, he’s so far out of the mainstream,’ Frank, a Massachusetts Democrat, told reporters today. Republican Hensarling is a sharp critic of [Dodd-Frank]. … The incoming chairman voted against the $700 billion bank bailout and supported an audit of the Federal Reserve, and told the Dallas Morning News … he wanted to phase out the government-backed mortgage giants Fannie Mae and Freddie Mac.” http://bloom.bg/SPaX3g

** A message from the Center for Audit Quality: The CAQ is dedicated to enhancing investor confidence and public trust in the global capital markets by fostering high quality performance by public company auditors and convening and collaborating with other stakeholders on policy and corporate governance issues. Learn more at www.theCAQ.org. **

HSBC COULD PAY $1.8 BILLION — Reuters’s Carrick Mollenkamp and Brett Wolf: “HSBC Holdings Plc might pay a fine of $1.8 billion as part of a settlement with U.S. law enforcement agencies over money-laundering lapses, according to several people familiar with the matter. The settlement with Europe's biggest bank — which could be announced as soon as next week — will likely involve HSBC entering into a deferred prosecution agreement with federal prosecutors. … The potential settlement, which has been in the works for months, is emerging as a test case for just how big a signal U.S. prosecutors want to send to try to halt illicit flows of money moving through U.S. banks.” http://reut.rs/XsRES4

FIRST CLIFF NOTES –

THE 37 PERCENT SOLUTION? — POLITICO’s Jake Sherman and Steve Sloan: “Could the solution to the fiscal cliff impasse lie between current tax rates and Clinton-era rates?It’s so simple — a 37 percent rate — it just might work.…Some Republicans think it’s not such a bad idea to press Obama to accept a 37 percent top rate, getting him to agree to massive entitlement reform, spending cuts and tax reform. That way, Republicans can fold a losing hand and go home for Christmas. … There’s a big caveat in all of this: Republicans would insist on pairing the tax increase with major entitlement changes and spending cuts, according to a dozen lawmakers from across the ideological spectrum who were interviewed for this story. …

“It’s not a plan that anyone is rushing to embrace yet, but, more importantly, few are ruling it out. Ways and Means Committee Chairman Dave Camp (R-Mich.), who is part of Speaker John Boehner’s negotiating team, is reserving final judgment on such a deal. ‘It depends on the entire package,’ said Camp, whose ultimate priority is to rewrite the Tax Code for lower rates across the board. ‘What are the spending reductions going to be? … You can’t consider that on its own without looking at all the other factors that might go into it.’” http://bit.ly/Ug1P59

M.M. REWIND – Close readers will recall M.M. has been arguing for some time that a deal would ultimately come together that included a top rate between the current level and the Clinton-era 39.6 percent coupled with significant spending cuts, a possible increase in the Medicare retirement age and chained-CPI for Social Security. Seems as though things are moving this way, with the debt ceiling now the biggest wild card.

DEAL COULD HAPPEN QUICK (BUT PROBABLY WON’T) — Reuters’s Thomas Ferraro and Mark Felsenthal: “U.S. stocks rose on Wednesday after Obama also said a deal to avert the fiscal cliff was possible within a week, though he expressed it as a hope not a prediction. … Obama said there could be a quick deal if Republican leaders dropped their opposition to raising tax rates for those making more than $250,000 a year in exchange for spending cuts and entitlement reforms. …

“‘If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, then the numbers actually aren't that far apart,’ Obama told The Business Roundtable. ‘Another way of putting this is we can probably solve this in about a week. It's not that tough, but we need that conceptual breakthrough,’ he said.” http://reut.rs/WKioIK

COBURN SAYS OK TO LIFT RATES — “Republican Senator Tom Coburn of Oklahoma said he could accept some higher tax rates as part of a long-term solution to the threat posed by spiraling U.S. debt. He said the path to prosperity would require at least a $9 trillion package of spending cuts and tax increases over 10 years, rather than the $4 trillion being discussed now. ‘Personally, I know we have to raise revenue. I don't really care which way we do it. Actually, I would rather see the rates go up than do it the other way, because it gives us a greater chance to reform the tax code and broaden the base in the future,’ Coburn said on MSNBC.” http://reut.rs/VGtWxL

THE CLIFF IS BIG BUSINESS IN D.C. — POLITICO’s Anna Palmer and Kate Brannen: “Message men, lobbyists, grassroots firms and lawyers are raking in cash as Congress and the White House argue about how to avoid a fiscal calamity at the end of the year. … It’s a classic Washington phenomenon: Ahead of a major deal, corporate clients and other groups pay a premium to the Washington influence machinery to make sure their interests are protected. …

“‘It's springtime in Washington in January,’ said Rich Gold, head of Holland & Knight's public policy practice, giving the example that his firm went on eight client pitches this week, up from about one per week two months ago. Republican operative Jade West of the National Association of Wholesale-Distributors said this lame-duck session is even hotter than most.” http://bit.ly/Vy1v8Q

HOW TO MAKE THE DEAL — Former OMB director Peter Orszag in his Bloomberg column: “Let’s start with the Republicans. … [R]aising huge amounts of revenue by reducing tax expenditures gets harder to do as the details become clear. The only practical way to hit a reasonable revenue target is to have some increase in marginal rates. … On Social Security … it’s possible to restore the program’s long-term solvency while also making it fairer — including by having it reflect the growing gap in life expectancy by income and education. Finally, and perhaps most important, Social Security reform can be phased in gradually, thereby minimizing the damage to the labor market from too much austerity too soon.” http://bloom.bg/TL7qCe

BOTH CURRENT PLANS FALL SHORT OF $4 TRILLION — Fiscal Times’s Eric Pianin: “While President Obama and House Speaker John Boehner generally agree on the need for $4 trillion in deficit savings over the coming decade as part of a fiscal cliff deal, both back plans that likely would fall well short of that goal, according to an analysis by Steven Rattner, a prominent private equity investor and the U.S. Treasury’s former auto industry advisor.” http://bit.ly/TJ46d6

TREASURY: GO WITH PERMANENT McCONNELLPROVISION — Treasury deputy secretary Jenni LeCompte: “The McConnell Provision received broad bipartisan support last year. In fact, it was one of those rare policy proposals that received support from both The Wall Street Journal and New York Times editorial boards. And for good reason. Extension of the McConnell Provision would lift the periodic threat of default from the U.S. economy and remove politics from future debt limit debates, while preserving Congress’s essential role in spending, revenue and borrowing decisions.” http://1.usa.gov/VxOlIZ

GOP: NO WAY — Reuters’s Rachelle Younglai: “Republican lawmakers took a firm stand … against an Obama administration proposal that would make it easier for the president to increase the nation's debt limit, worried it would undercut their leverage to cut government spending. Republicans introduced a nonbinding resolution in the House of Representatives that, if approved, would put the chamber on record opposing the plan, and a Senate Republican began circulating a letter to … Obama saying it was critical that Congress's role in setting the limit not change. … The idea that the president would give himself the ability ‘to raise the debt limit infinitely at any time he wants is the definition of insanity,’ said Arizona Republican Rep. Trent Franks. Wyoming Republican Rep. Cynthia Lummis called it ‘an unprecedented power grab,’ while Ohio Republican Rep. Pat Tiberi said Obama was in ‘la la land.’” http://reut.rs/SOKYZz

IMF: TAX INCREASES DON’T HURT GROWTH – WP’s Howard Schneider: “A new study by the International Monetary Fund raises a further warning flag for fiscal cliff negotiators … [W]ith a U.S. economy that is growing but still trying to make up lost ground from the 2008 crisis, a $1 change in government spending could knock as much as $1.80 in output from the economy. … One brighter spot that could also influence negotiators: The growth impact of a tax hike is estimated to be negligible. … While the spending cuts would comprise a heavy drag on growth, the fund paper suggests that a 1 percent rise in tax revenue would knock just 0.1 percent from gross domestic product.” http://wapo.st/Szsa0A

GEITHNER: WE ARE WILLING TO GO OVER CLIFF — Treasury Secretary Tim Geithner asked by CNBC’s Steve Liesman if the administration was willing to go over the cliff if Republicans refuse to allow rates to rise: “Oh, absolutely. We don't see a way of doing it that makes any sense or has any political viability without rates going up. … [T]he size of the problem in some sense is so large it can't be solved without rates going up. I think there's a broad recognition of that reality now. … [I]f Republicans recognize this basic reality that rates are going to have to go up as part of a balanced plan, then … we will be prepared to do a substantial amount of meaningful reforms and savings on the spending side, including entitlements.”

IT REALLY IS A CLIFF, NOT A SLOPE OR A HILL OR A CURB – American Action Forum’s Cameron Smith and Douglas Holtz-Eakin: “[C]liff diving would have significant impact on financial markets, impair asset values, exacerbate credit stringency and amplify the direct effects on the main street economy. Moreover, contrary to what some have asserted, such impacts cannot be 'unwound' by retroactively legislating away the fiscal cliff.” http://bit.ly/VnYVw9

MANUFACTURING STALLING — Per NAM’s IndustryWeek Survey of Manufacturers: “Manufacturing activity has stalled of late, global sales are slowing and the threat of going over the fiscal cliff looms. These are contributing factors to a sharp decline in manufacturers’ optimism, which has plummeted from 88.7 percent in March to barely more than 50 percent today. Add in the U.S. economy’s modest growth this year — most likely up 2 percent in the current quarter and for the year — and it’s easy to understand why business leaders are increasingly more worried about their business’s prospects.”

ALSO FOR YOUR RADAR –

WEALTHY CREATE THEIR OWN STIMULUS – Reuters BreakingViews’s Agnes T. Crane: “The wealthy in America are creating their own personal stimulus. Special dividends are coming thick and fast. Oracle’s Larry Ellison and the Walton family of Wal-Mart Stores are among the noteworthy beneficiaries. Payouts have potentially saved recipients billions in taxes so far. Uncle Sam might have put that to work fixing infrastructure. … If this quarter’s special dividends alone were instead paid out next year with the highest feasible tax rates in force, the U.S. government’s coffers would be at least $5 billion heavier in a few months’ time. That’s already about one-tenth of what Obama wants earmarked for spending on much needed infrastructure upgrades across the United States.” http://bit.ly/SOIBWR

CITI MAKES MORE BIG CUTS — WSJ’s Suzanne Kapner: “Underlining his determination to crack down on costs, Citigroup Chief Executive Michael Corbat set out plans … to cut 11,000 jobs, close 84 branches and retreat from consumer banking in a handful of countries. Plans for workforce reductions were underway when Mr. Corbat was named to succeed Vikram Pandit as CEO in October, according to people familiar with the bank. But Mr. Corbat turned up the heat, demanding last month that some business heads increase their cost-reduction targets by a third, according to the people. Mr. Pandit had clashed with the board over a variety of issues, including cost cutting and spending priorities and directors forced him to resign. … Wednesday's move is likely the opening salvo in a wave of cutbacks, business sales and other moves that could reduce the company's global reach, analysts said.” http://on.wsj.com/WKPzM9

**A message from the Center for Audit Quality: The Center for Audit Quality is dedicated to enhancing investor confidence and public trust in the global capital markets by fostering high quality performance by public company auditors; convening and collaborating with other stakeholders to advance the discussion of critical issues; and advocating policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions.

The CAQ and other governance leaders recently issued a new resource to help audit committees assess the performance of their external auditor. The “Audit Committee Annual Evaluation of the External Auditor” offers a scalable approach to help audit committees to objectively evaluate the auditor’s performance. Learn more at www.theCAQ.org. **

Readers' Comments (1)

UT DO REPUBLICANS CARE WHAT CEOS THINK? — From a top GOP operative: “Think you are overestimating the impact of CEOs on Republican leaders/members. The GOP, and the public, largely view CEOs as people who stick their finger in the wind and then choose a side out of their own selfish corporate interest. Translation: ideologues are like Nero, they play the same tune while all around them burns. Or they do not listen to the voters, to CEOs or to common sense. They just repeat the mantra of lies.

Petulant children want what they want or they will hold their breath or whine until they get it.

“I want what I want when I want it.” — Eric Cantor’s High School Yearbook Quote

Government need to be left to grownups, the children need to be disciplined. Ryan and Cantor need to stripped of staff and power, unfortunately Boehner would need to grow a backbone